European shares slip on oil drop, weak U.S. data

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06/14/2017 | 06:46pm CEST

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LONDON (Reuters) - European shares pulled back on Wednesday, as energy stocks fell on tumbling crude prices and banks were hit after weak U.S. data raised questions over future rate hikes in the world's biggest economy.

Even though the Federal Reserve was almost certain to raise interest rates later in the day, disappointing retail sales and inflation numbers cast doubt on the speed of its monetary policy tightening.

The STOXX 600 <.STOXX> index fell 0.3 percent with the banks <.SXEP>, whose lending business gets a boost in margins when rates rise, taking off most points from the pan-European index with a fall of 1.3 percent.

The oil sector <.SXEP> fell 1.6 percent to six-month lows as crude prices tumbled to a five-week low following data showing an unexpectedly large weekly build in U.S. gasoline inventories.

Shares had earlier been supported by data showing that euro zone industrial output grew in April, and that employment rose in the first quarter of the year to reach a record high.

Among outstanding movers, the Swedish measurement technology firm Hexagon (>> Hexagon) rose 10.8 percent to a new record high after a Wall Street Journal report that it was in talks about a potential sale to undisclosed buyers.

Hexagon said that the market would be immediately informed should evaluations lead to concrete results.

Technology stocks <.SX8P> rose 0.4 percent, clawing back some ground after a nosedive fuelled by jitters over valuations, particularly in the U.S..